The <a href=http://www.cnbc.com/id/39911910?__source=vty|collegedebtcrisis|&par=vty> Price of Admission â€“ Americaâ€™s College Debt Crisis</a> documentary was on CNBC tonight. I think it will be on again on 12/26.
It was a look at how studentâ€™s are getting into trouble with student loans.
Now some of the students are getting their loan disbursements on a debit card. One thing with this is they can use it for anything. Some used them for pizza, at bars and even to buy a car. One person on the documentary said it is money for their living expenses and they would be spending the money anyways if they had received the money some other way.
One of the companies that provides the debit cards is Higher One. University of North Dakota was mentioned in the documentary. The Vice President of UND said the administrative costs are lower when they use the debit cards. Higher One makes their money from transaction fees from businesses when the students use them and from extra fees the students end up paying. Like other debit cards, students are charged fees up to $2.50 each when not using specific ATM machines. UND tuition has increased 30% over the past 5 years.
Colleges and universities keep building state of the art buildings and stadiums and the costs are passed onto students. And more costs are also being passed onto students with state budgets being stretched tighter.
Unlike mortgage problems, in most cases there is no consumer protection with student loans. They canâ€™t be refinanced and in most cases cannot be written off with bankruptcy. In some cases student loans can outlive students. There was a case shown that a student was killed in a car accident and they went after the parents for the balance of $81,000. They suggested, if you do cosign for a loan, to purchase life insurance to cover it in case of an accident.
In some cases, students graduate with large balance of student loan debt and cannot find a job that pays enough to make the payments.